Forming A Common Cause
Published for the Week Of November 8, 2004
or CHS Technology, banding together with other like-minded small-business VARs in a group gives the $1.3 million Norman, Okla., company the service punch of a large national organization.
\
\
That expanded service footprint, in fact, was one of the keys to winning a lucrative government agency deal in June, said John Gray, vice president of the 16-year-old solution provider.
\
\
“There is strength in numbers,” said Gray, who joined Tech Data’s TechSelect network four years ago and has teamed up with other members to provide service for clients in Tennessee and South Texas. “I can’t imagine running the business without the TechSelect membership. We just wouldn’t be competitive. It’s just too hard to go it on your own,” he said.
\
\
Gray isn’t alone. Smaller VARs are increasingly forming alliances and using the advantages they get from being part of a national solution provider organization to turn the tables on larger rivals. Ingram Micro’s VentureTech, which has 400 members, recently courted 60 Apple specialists to join its ranks. Tech Data has about 362 TechSelect members, which account for about 15.5 percent of its domestic sales. The distributor’s goal is to boost that number to 25 percent of U.S. sales by the end of next year through membership expansion and growth.
\
\
Some solution providers are joining multiple organizations to pack a bigger punch in the market. These VARs say the independent organizations--such as the 2,000-member-strong ASCII Group, Bethesda, Md., and the 55-member Coast Solutions Group, a professional service network founded by Irvine, Calif.-based solution provider Coast Technologies--are more community-oriented and less vendor- and product-driven than the distributor-run organizations. Coast Solutions Group is spreading out from its Southern California base, hoping to add 1,000 members to its ranks, according to Paul Freeman, the organization’s president.
\
\
VARs say the added service muscle gained by teaming with other members in solution provider organizations helps them win deals they never would have gotten on their own. Furthermore, they say they get exclusive pricing advantages, strategic insight from brainstorming with colleagues, and the leverage they need to quickly get assistance from vendors. The solution provider organizations are giving VARs a powerful collective voice that can influence vendors, they say.
\
\
Gray, for his part, recalled an instance in which he began seeing a large number of disk-drive failures from a manufacturer he declined to name. The vendor denied there was a problem when initially contacted. But that changed when Gray put a message on a TechSelect forum to inquire if other VARs were seeing the same failures and quickly received 10 affirmative responses. Once Gray and others began considering a class-action lawsuit, Gray said, the vendor “admitted that they had a problem and suggested that arrangements could be made to buy back the drives.”
\
\
Tech Data is not only expanding the number of solution providers eligible to participate in its TechSelect program, it is also considering implementing a formal TechSelect service network.
\
\
Ingram has had a formal service network, the Ingram Micro Service Network (IMSN), for about 10 years in conjunction with its VentureTech solution provider organization, which VARs can use to expand their service reach. What’s more, Ingram has inked a deal for its service network partners to join with IBM Global Services.
\
\
Darren McBride, president of Sierra Computers & Training, a Reno, Nev.-based solution provider, said organizations such as VentureTech can mean the difference between success and failure. “VentureTech gives us the credibility to bid against national service organizations,” he said. “It gives us the ability to go and tell a national story.”
\
\
More importantly, however, is the strategic insight he gains from networking with his peers, McBride said. Recently, for example, McBride began looking for ways to counter the rise of the software-as-a-service phenomenon and talked about it with other members. “That discussion I had with another VentureTech member really made me think seriously about how we are going to change our services model,” he said.
\
\
As a result, McBride has begun shifting Sierra Computers’ business model by narrowing its focus to become more vertical, specializing in disaster-recovery and backup services related to HIPAA and other government compliance initiatives. “The game changes all the time, more so than in any other industry,” McBride said. “When I started 20 years ago, I was knowledgeable in technology and could go it alone. Now there is just too much to know.”
\
\
The solution provider organizations also provide pricing advantages. VentureTech, for example, offered a number of exclusive deals to its members at its fall invitational conference in September from vendors such as IBM, Microsoft, Cisco Systems, Veritas Software, Computer Associates International and McAfee. ASCII has volume purchase agreements with distributors such as D&H Distributing, Ingram and Synnex and vendors such as SonicWall. TechSelect members can receive the distributor’s Silver-level VAR pricing.
\
\
But solution providers say the purchasing power the organizations offer pales in comparison to the service advantages.
\
\
Gia McNutt, CEO of Special Order Systems, a Sacramento, Calif., service provider specializing in IP communications, said small VARs simply cannot compete with large national service organizations without being a part of a solution provider organization. Being a member of IMSN has allowed her company to win a number of national deals, including a nationwide project for Trader Joe’s. “This allows us to win nationwide business and support nationwide customers,” McNutt said. “From a selling perspective, it’s a huge tool in our belt.”
\
\
McNutt recently added another tool to Special Order Systems’ belt by joining Coast Solutions Group, a professional service collective with more than 50 independent members specializing in various disciplines. Being a member of Coast Solutions Group has already provided McNutt with a couple of hundred hours of highly profitable service work, she said.
\
\
One reason McNutt joined the group was it gave her access to talent in specific technology areas outside of her company’s IP networking expertise. “I think a customer should get an expert in all areas, not just one area,” she said. “If someone needs a SAN, we are going to partner to bring that to them.”
\
\
Solution providers that try to do too many things usually end up providing sub-par service in certain areas, she said.
\
\
Michael Strohl, president of Entisys Solutions, Concord, Calif., a 15-year-old service provider with $6 million in annual revenue, recently joined Coast Solutions Group as well. “We hooked up with Coast as a catalyst to accelerate our business,” Strohl said. “We have gotten new opportunities that we would never have gotten on our own.”
\
\
Strohl said the question each VAR has to ask is: “Why would you go it alone?” He said organizations such as Coast Solutions Group provide a way for VARs to accelerate their sales growth through partnerships, which translates into lower cost of sales.
\
\
ASCII Group, which celebrates its 20th anniversary this year, is also helping partners hook up with one another to win new business, said Risa Stolly, chief executive of A-Prompt, a Lehigh Valley, Pa., solution provider and ASCII Group member for the past six years. Stolly said she has developed partnerships with a number of ASCII members that have allowed her to access products and services that she, herself, is not authorized to sell. “Where we’ve really seen the benefit from being a member of ASCII is the partnership we have developed with other resellers,” she said.
\
\
Joe Balsarotti, CEO of Software To Go, a Clayton, Mo., member of ASCII Group for 19 years, said ASCII has provided a wide range of benefits, from better pricing on products to training and coop marketing opportunities. But he added that the most important benefit was the power that comes from joining with other smaller VARs in a community group. The networking, constant communication and partnership with other ASCII Group members, Balsarotti said, have allowed him to solve problems that he would never have been able to answer on his own. “It has saved us a lot of time and money,” he said. “It’s all about service, consulting and knowledge.”
\
\
The knowledge that VARs get from teaming up is ultimately helping them become bigger forces to be reckoned with in the market. At CHS, Gray is betting that the service partnerships he forms through TechSelect will help him double his business over the next five years. “I am very optimistic,” he said. “The advantages we get from partnering are only getting bigger.”
\
\
| SOLUTION PROVIDER ORGANIZATIONS |
|
TechSelect \ Parent: Tech Data, Clearwater, Fla. \ Number of partners: 362 \ Type of partners: Small to midsize solution providers \ Entrance requirements: Based on expertise, certifications, authorizations, purchase commitments and revenue; $2,000 annual fee \ Coverage: Nationwide \ \ VentureTech Network \ Parent: Ingram Micro, Santa Ana, Calif. \ Number of partners: 400 \ Type of partners: Small to midsize solution providers \ Entrance requirements: Based on location, expertise, certifications, authorizations, purchase commitments and revenue; $2,000 annual fee \ Coverage: Nationwide \ \ Coast Solutions GroupParent: Coast Technologies, Irvine, Calif. \ Number of partners: 55 \ Type of partners: Small to midsize solution providers \ Entrance requirements: Based on expertise and certifications. Starting in January, any solution provider will be able to purchase services through the group for a fee, which has yet to be determined. \ Coverage: Southern California, expanding to 10 cities throughout the United States \ \ The ASCII Group \ Bethesda, Md. \ Number of partners: 2,000 \ Type of partners: Small-business solution providers \ Entrance requirements: Reseller certificate; $95 fee per month \ Coverage: United States and Canada, expanding to England |
TechSelect
\
Parent:
Tech Data, Clearwater, Fla.
\
Number of partners:
362
\
Type of partners:
Small to midsize solution providers
\
Entrance requirements:
Based on expertise, certifications, authorizations, purchase commitments and revenue; $2,000 annual fee
\
Coverage:
Nationwide
\
\
VentureTech Network
\
Parent:
Ingram Micro, Santa Ana, Calif.
\
Number of partners:
400
\
Type of partners:
Small to midsize solution providers
\
Entrance requirements:
Based on location, expertise, certifications, authorizations, purchase commitments and revenue; $2,000 annual fee
\
Coverage:
Nationwide
\
\
Coast Solutions GroupParent:
Coast Technologies, Irvine, Calif.
\
Number of partners:
55
\
Type of partners:
Small to midsize solution providers
\
Entrance requirements:
Based on expertise and certifications. Starting in January, any solution provider will be able to purchase services through the group for a fee, which has yet to be determined.
\
Coverage:
Southern California, expanding to 10 cities throughout the United States
\
\
The ASCII Group
\
Bethesda, Md.
\
Number of partners:
2,000
\
Type of partners:
Small-business solution providers
\
Entrance requirements:
Reseller certificate; $95 fee per month
\
Coverage:
United States and Canada, expanding to England
TechSelect
\
Parent:
Tech Data, Clearwater, Fla.
\
Number of partners:
362
\
Type of partners:
Small to midsize solution providers
\
Entrance requirements:
Based on expertise, certifications, authorizations, purchase commitments and revenue; $2,000 annual fee
\
Coverage:
Nationwide
\
\
VentureTech Network
\
Parent:
Ingram Micro, Santa Ana, Calif.
\
Number of partners:
400
\
Type of partners:
Small to midsize solution providers
\
Entrance requirements:
Based on location, expertise, certifications, authorizations, purchase commitments and revenue; $2,000 annual fee
\
Coverage:
Nationwide
\
\
Coast Solutions GroupParent:
Coast Technologies, Irvine, Calif.
\
Number of partners:
55
\
Type of partners:
Small to midsize solution providers
\
Entrance requirements:
Based on expertise and certifications. Starting in January, any solution provider will be able to purchase services through the group for a fee, which has yet to be determined.
\
Coverage:
Southern California, expanding to 10 cities throughout the United States
\
\
The ASCII Group
\
Bethesda, Md.
\
Number of partners:
2,000
\
Type of partners:
Small-business solution providers
\
Entrance requirements:
Reseller certificate; $95 fee per month
\
Coverage:
United States and Canada, expanding to England